Final Report - World Trade Organization

2. International donors could finance training
and advocacy programmes. This would alleviate
the strained budgets of the competition authorities
in many of the 7-Up countries without threatening
their independence.
As stated, the South African competition authorities
are the exception in many cases. They are
substantially better equipped in all regards. Their
funding seems to be sufficient and at a similar level
with developed countries like Norway. The majority
of their funds are obtained through notification and
process fees from merger cases. The Competition
Commission is therefore also financially quite
independent. This, however, may not work in all the
project countries. Merger activity differs across
countries and may not be very substantial in many
countries, especially small ones, thus notification fees
may not be a viable source of income.
Another possibility for competition authorities to
increase their financial resources while at the same
time making them less dependent on government
funds, would be to grant them a percentage of the
fines imposed on companies that violate the
competition laws. A problem with this is that the
authorities would have a perverse incentive to impose
excessive fines on these companies. This would
diminish their credibility as an independent regulator
and would therefore probably not be the best way to
increase the authorities’ resources.
Nevertheless, most of the competition agencies are
certainly in need of extra financial resources.
Although increased government funding is a
possibility, especially in countries where the
authority’s budget as a percentage of that of the
government is low. In countries like Zambia and
Tanzania where the relative budget is already high,
this may not be desirable in the face of so many
other urgent problems. Foreign donors could,
therefore, play a role in setting up and providing
specific training programmes and finance advocacy
activities to create a competition culture. They could
also provide resources to establish and maintain
libraries and databases. This type of support would
alleviate the authorities’ budgetary problems without
interfering in their ability to make their own decisions
based on their own priorities.
3. Better cooperation and coordination among the
CAs are required, especially to deal with cases
of international dimension.
Apart from staff training programmes, cooperation
with foreign competition authorities is also required
for dealing with cross-border issues. Increasingly, the
competition agencies in the 7-Up countries are faced
with international mergers and anti-competitive
practices. Whether countries have special provisions
for extra-territorial jurisdiction or apply the ‘effects’
doctrine is not important when they have no means
to enforce their decisions. Often the companies
involved are beyond the reach of the competition
agencies, which also causes problems in obtaining
the information necessary to make a decision.
Cooperation with foreign agencies could help in this
regard. A multilateral framework for cooperation will
be quite useful, so that demands for information are
not treated in a partisan manner.
8.4 Scope and Coverage
A full evaluation of having and implementing a
competition law requires an assessment of its
effectiveness. This effectiveness is measured by the
extent to which the objectives of a country’s
competition law and policy are obtained. Objectives
vary from country to country and are influenced by
their specific circumstances and needs.
An evaluation of a competition law and policy’s results
vis-à-vis its objectives is by its very nature difficult,
given the fact that market realities are constantly
changing. In the 7-Up group this difficulty is
enhanced by the fact that most of the countries have
only recently enacted competition legislation, making
it too early to see the full effects of the competition
law and policy. Nevertheless, certain problem areas
and possible solutions can be identified.
1. Competition policy and law should focus on
consumer welfare and efficiency while at the
same time take cognisance of a country’s overall
public policy.
Although consumer welfare and economic efficiency
are generally the core objectives of competition law
and policy, the legislation in the 7-Up countries also
reflects many other development needs. For instance,
the Zambian competition law hopes to encourage
innovation, ensure fair distribution and reduce
unemployment. In Tanzania, merger evaluations must
take account of the impact on employment,
competitiveness in export markets and the ability to
face import competition.
The advancement of social and economic welfare,
the promotion of small and medium-sized enterprises,
Pulling Up Our Socks w 91